The Demand for Youth: Explaining Age Differences in the Volatility of Hours

Abstract

Over the business cycle young workers experience much greater volatility of hours
worked than prime-aged workers. This can arise from age differences in labor supply or
labor demand characteristics. To distinguish between these, we document that, for young
workers, both the cyclical volatilities of hours and wages are greater than those of the
prime-aged. We argue that a general class of models featuring only age-specific labor
supply differences cannot reconcile these facts. We then show that a simple model
featuring labor demand differences can.